Consumer Services: Tuning in to IPTV

With more telcos expected to add digital TV to their services, and equipment suppliers reporting increased activity, In- Stat/MDR expects more than 100 percent growth in telco TV subscribers in 2004. The high-tech market research firm finds that the delivery of digital TV service over ADSL, VDSL, and fiber networks is becoming increasingly viable, as improvements in the data rates and reach of DSL are enabling telcos to reach more customers with the right amount of bandwidth. At the same time, advances in video compression are reducing the right amount of bandwidth needed for each video stream.

“Competitive threats and fixed line revenue pressures are encouraging telcos to become active in offering digital TV to their subscribers. The possibility of gaining an additional $60 per month in revenue, while becoming less likely to lose $30 a month to your competition, is an important factor in the business case,” says Michelle Abraham, a senior analyst with In-Stat/MDR. “The issue to solve then is what technologies are available and what will work best for the network to meet the TV needs of potential subscribers.”

Of course, the biggest SUPERCOMM announcement in the telco TV space was SBC Communications Inc.’s announcement of a potential five-year, $6 billion investment in FTTN technology and related news that it’s chosen Microsoft’s IPTV platform for video delivery.

“Everybody is making a big deal about this,” says Abraham. “But at this point it’s a trial. The larger telcos all have plans. For instance, Verizon has a fiber-to-the-premises plan.”

Kelly Smith, vice president of business development for video equipment vendor at Myrio Corp., says although it’s only a trial, the attention the announcement is bringing to IPTV is significant. “We saw the same thing with Bell Canada [and Microsoft TV] last year,” Smith says.

Also at SUPERCOMM, Microsoft and Lucent Technologies announced an MoU to integrate Microsoft TV’s IPTV software platform with Lucent solutions. The goal is to better enable providers to add digital TV offerings to their broadband service suites. The collaboration will enable delivery of both standard and HDTV as well as on-demand programming to Microsoft TV’s IPTV-based set-top box via the Lucent Stinger IP-enabled DSLAM and Lucent ADSL2+ modem.

Microsoft TV offers an end-to-end solution that begins with the software in the set-top box and ends with the headend, says Ed Graczyk, director of marketing for Microsoft TV. “And with SBC as our first U.S. customer, that’s always big,” he says. “That’s encouraging for IPTV and good for the industry and good for consumers.”

Myrio, which provides software, content and integration services for video over IP, had its own customer announcement at the show. Pioneer Telephone Cooperative, the third largest telephone cooperative in the United States, selected Myrio’s IP video platform for an IPTV deployment in 30 counties in Oklahoma. Also, Western Illinois Video, a consortium of eight IOCs established in January 2004, has deployed Myrio’s IP video platform, proving that this market is indeed moving quickly.

In addition, Myrio is working in trials with Tier 1 carriers in North America and Europe. “The IOCs, even larger ones like CenturyTel, will tell you [telco TV] is viable,” says Smith of Myrio. “If you talk to an RBOC, they would probably tell you that without a doubt...IPTV is part of its future. They will be careful in the technology selection, however, because they want the service to be robust and reliable,” he says. “I’d be very surprised if anyone was calling IPTV a passing trend today. That may have been true last year, but not today.”

Craig Bender, vice president of marketing and corporate development for Tut Systems, adds that IPTV is proven. “Look at the number of customers,” he says. “We’re talking about take rates of 50 percent of market share after just a few years.”

He says that IPTV also opens the door to value-added video services such as VoD. “Customers are taking local content feeds and storing them,” Bender says. “Then the carrier offers it as free video-on-demand local content.”

For example, an end user might have a son playing in a football playoff game. That user goes to the game, and then later, he can watch his son’s performance via VoD. “It creates a good community presence,” Bender says.

In fact, Entone Technologies, which specializes in selling personal television infrastructure, and Widevine Technologies, a content security solution provider for the video over IP market, have teamed up for an integrated solution for offering VoD to broadband IP video services operators.

While new access technologies such as ADSL2+, FTTP and FTTU promise to deliver the bandwidth to carry bandwidthintensive services like video, new compression will allow for even more bandwidth and flexibility to deliver video services.

Indeed, Tandberg Television at SUPERCOMM demonstrated its real-time encoding hardware for Windows Media 9. The Tandberg EN5920 as of late June was the only shipping dedicated hardware encoding platform for Windows Media 9, according to the company. It is based on Tandberg’s Intelligent Compression Engine audio and video compression platform.

Tandberg also did a show demo of 1080i and 720p high-definition video encoded alternatively with MPEG2, MPEG4 and Windows Media 9.

In other news on the video front, Calix unveiled at SUPERCOMM its Calix Compatible program, a certification process that aims to ensure smooth deployment of multivendor solutions, specifically advanced IP-based voice, data and video services. In fact, Calix already is partnering with many companies in the telco TV space.

“We’re still in the early stages of market development [for IPTV], says Kevin Walsh, vice president of marketing for Calix. “So there are some standards, but they are rough around the edges. Our goal is to reduce the cost, time-tomarket and risk involved.” To help achieve that, Calix has built a large-scale testing facility at its headquarters in Petaluma, Calif.